Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 20, Problem 22DQP
a.
To determine
Identify a type of test for each of the
b.
To determine
State transaction related audit objective for each test of control and substantive test of transactions.
c.
To determine
State balance related audit objective for each test of details of balances.
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Students have asked these similar questions
Below are some audit procedures. Classify each procedure according to the following types of audit
evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the client,
6) reperformance, and 7) analytical procedure. (each procedure can be used more than once or not at
all)
Audit Procedures
Count inventory items and record the amount in the audit working
papers.
Stand by the payroll time clock to determine whether any
employee "punches in" more than one time.
Calculate the ratio of cost of goods sold to sales as a test of
overall reasonableness of gross margin relative to the preceding
year.
Obtain information about the client's internal controls by asking
questions of client personnel.
Examine the purchase invoice for a piece of equipment and
ensure that the equipment was received and is in operation.
The auditor computes the debt covenant based on the financial
information to ensure that the client's calculation was performed
correctly.
Obtain…
) The following audit procedures are typical of thosefound in auditing the payroll and personnel cycle:1. Obtain a schedule of all payroll liabilities and trace to the general ledger.2. Scan journals for all periods for unusual transactions to determine whether they arerecorded correctly.3. Select a sample of 40 entries in the payroll journal and trace each to an approvedtime card.4. Discuss with management any payroll liabilities recorded in the prior year that arenot provided for in the current period.5. Examine evidence that payroll hours and wage rates are verified by an independentperson.6. Select a sample of 20 cancelled payroll checks and account for the numerical sequence.7. Review board of director meeting minutes to verify the salary for the chief executiveofficer.8. Compute payroll tax expense as a percentage of total wages, salaries, and commissions.9. Select a sample of 20 payroll payments and trace to payroll journal entries for name,date, and amounts.10. Examine owner…
Auditors ordinarily ascertain whether payroll checks are properly endorsed during the auditofa. Clock cards.b. The voucher system.c. Cash in bank.d. Accrued payroll.
Chapter 20 Solutions
Auditing And Assurance Services
Ch. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Distinguish among a payroll master file, a W-2...Ch. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - Prob. 6RQCh. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - Prob. 9RQCh. 20 - Prob. 10RQ
Ch. 20 - Prob. 11RQCh. 20 - Prob. 12RQCh. 20 - Prob. 13RQCh. 20 - Prob. 14RQCh. 20 - Prob. 15RQCh. 20 - Prob. 16.1MCQCh. 20 - Prob. 16.2MCQCh. 20 - Prob. 16.3MCQCh. 20 - Prob. 17.1MCQCh. 20 - Prob. 17.2MCQCh. 20 - Prob. 17.3MCQCh. 20 - Prob. 18.1MCQCh. 20 - Prob. 18.2MCQCh. 20 - Prob. 18.3MCQCh. 20 - Prob. 19DQPCh. 20 - Prob. 20DQPCh. 20 - Prob. 21DQPCh. 20 - Prob. 22DQPCh. 20 - Prob. 23DQPCh. 20 - Prob. 24DQPCh. 20 - Prob. 25DQPCh. 20 - Prob. 26DQPCh. 20 - Prob. 27DQPCh. 20 - Prob. 28C
Knowledge Booster
Similar questions
- Determine whether each of the following procedures is a test of control or a substantive test. a) The auditor inspects a sample of sales orders to determine if the sales manager has approved the orders. b) The auditor sends a confirmation to the bank to verify the cash balance on hand. c) The auditor attends the inventory count and observes client personnel as they conduct the count. d) The auditor recalculates the amount of interest payable. e) Stand by the payroll time clock to determine whether any employee "punches in" more than one time.arrow_forwardWhich of the following is a preventive control?a. Reconciliation of a bank account.b. Recalculation of a sample of payroll entries by internal auditors.c. Separation of duties between the payroll and personnel departments.d. Detailed fluctuation analysis completed by the CFO for revenue.arrow_forwardIn determining the effectiveness of an entity’s policies and procedures relating to the occurrence assertion for payroll transactions, auditors most likely would inquire about anda. Observe the separation of duties concerning personnel responsibilities and payrolldisbursement.b. Inspect evidence of accounting for prenumbered payroll checks.c. Recompute the payroll deductions for employee benefits.d. Verify the preparation of the monthly payroll account bank reconciliationarrow_forward
- An auditor is likely to perform each of the below procedures to obtain evidence regarding the potential understatement of accounts payable at year-end (i.e., the Completeness assertion) except… Question options: Inspect purchase orders and receiving reports for accounts payable recorded at year-end. Inspect the open invoice file for invoices to be paid after year-end. All options describe procedures that can be used to identify a potential understatement of accounts payable. Analyze cash disbursements made during the first few weeks of the subsequent year and inspect supporting documentation for each disbursement.arrow_forwardList the supporting documents and records the auditorwill examine in a typical payroll audit in which the primary objective is to detect fraudarrow_forwardPayroll Tests of Controls. The diagram in Exhibit 8C.22.1 describes several payroll tests of controls. It shows the direction of the tests, leading from samples of clock cards, payrolls, and cumulative year-to-date earnings records to blank squares.Required:For each blank square in Appendix Exhibit 8C.22.1, write a payroll test of controls procedure and describe the evidence it can produce.arrow_forward
- The following are examples of documentation typically obtained by auditors: Duplicate sales invoices Subsidiary accounts receivable records Vendors’ invoices General ledgers Title insurance policies for real estate Notes receivable Bank statements Cancelled payroll checks Cancelled notes payable Payroll time cards Required: Classify each of the preceding items according to type of documentation: (1) internal or (2) external.arrow_forwardWhich of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable? Footing the list of accounts payable. Tracing shipping reports after year-end to related customer purchase orders and invoices. Examining underlying documentation for cash disbursements in the period after year-end. Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices.arrow_forwardThe following are audit procedures from different transaction cycles:1. Examine duplicate copy of shipping documents for evidence that quantities wereverified before shipment.2. Select a sample of payroll checks and agree hours to employee time records.3. Use audit software to foot and cross-foot the sales journal and trace the balance tothe general ledger.4. Examine voucher packages and related vendor invoices for evidence of approval ofaccount classification.5. Trace a sample of shipping documents to entry in the sales journal.6. Examine a sample of warehouse removal slips for signature of authorized official.7. Select a sample of entries in the cash receipts journal and trace to posting in individualcustomer accounts receivable records.8. Select a sample of sales invoices and agree prices to the approved price list.a. For each audit procedure, identify whether it is a test of control or a substantive testof transactions.b. For each audit procedure, identify the transaction-related…arrow_forward
- Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?a. Examine confirmation requests returned by creditors whose accounts are on a subsidiary trial balance of accounts payable.b. Examine a sample of cash disbursements in the period subsequent to year-end.c. Examine a sample of invoices a few days prior to and subsequent to the year-end to ascertain whether they have been properly recorded.d. Examine unusual relationships between monthly accounts payable and recorded purchases.arrow_forwardEd Caluag, CPA was engaged to audit the financial statement of KMJS, Company, a continuing audit client. Ed is about to audit KMJS’s payroll transactions. KMJS uses an in-house payroll department to compute payroll data and prepare and distribute checks. During the planning process, Ed determined that the inherent risks of overstatement of payroll expense is high. In addition, Ed obtained an understanding of internal control and assessed control risk at the maximum level for payroll related assertions. Required: Describe the audit procedures Ed Caluag should consider performing in an audit of KMJS’s payroll transactions to address the risk of overstatement.arrow_forwardWhich of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable? A. A copy of the invoice sent to the customer. B. Acopy of the customer's sales order held by the client. C. An accounts receivable confirmation received by the auditor from the client's customer. D. An aging schedule showing the composition of the year-end-accounts receivable balance.arrow_forward
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